- The Washington Times - Monday, May 2, 2005

NEW YORK (AP) — Stocks finished an uncertain session modestly higher yesterday despite a sharp rise in crude oil prices and unease over the Federal Reserve’s upcoming meeting.

Crude futures rallied in afternoon trading, reversing last week’s trend and adding to worries about high energy prices as the summer driving season approaches. A barrel of light crude settled at $50.92, up $1.20, on the New York Mercantile Exchange.

The Fed’s Open Market Committee was expected to raise the nation’s benchmark rate by a quarter percentage point to 3 percent at its meeting today. Many investors waited to see what the central bank would say in its assessment of the recent slowdown in growth and the prospects for inflation.

“There’s a certain amount of caution which is preventing investors from putting more assets to work,” said Michael Sheldon, chief market strategist at Spencer Clarke LLC. “Right now there are too many question marks about the economy that need to be answered before we can move forward.”

Although trading volume was lower than usual, the buying was broad-based as some investors took a chance that the Fed’s statement might be bullish for the market.

The Dow Jones Industrial Average rose 59.19, or 0.58 percent, to 10,251.70.

Broader stock indicators also moved higher. The Standard & Poor’s 500 was up 5.31, or 0.46 percent, at 1,162.16, and the Nasdaq Composite Index gained 7.00, or 0.36 percent, to 1,928.65.

The bond market finished slightly higher after a volatile session, with the yield on the 10-year Treasury note falling to 4.19 percent from 4.20 percent late Friday. The dollar moved higher against most major currencies, while gold prices fell sharply.

In merger news, Qwest Communications International Inc. added 5 cents to $3.47 after the company officially dropped out of contention for MCI Inc. after Dow component Verizon Communications Inc. revised its bid yesterday morning. MCI will now go to Verizon for $8.5 billion, even though Qwest still had a $9.85 billion offer on the table. Verizon fell 83 cents to $34.97, while MCI lost 83 cents to $25.70.

High-end retailer Neiman Marcus Group Inc. dropped $5.36 to $92.96 after the company announced a $5.1 billion buyout agreement with two private equity firms. The deal, signaling further consolidation in the retail sector, valued the company at $100 per share.

After climbing sharply late Friday, shares of Morgan Stanley tumbled $3.23 to $49.39 after the company’s board, in an emergency weekend meeting, endorsed embattled Chairman and Chief Executive Officer Phil Purcell. The board made changes to ease the ouster of Mr. Purcell, but did not dismiss him or strip him of the title of chairman, as some had expected.

Advancing issues outnumbered decliners by about 8 to 5 on the New York Stock Exchange, where preliminary consolidated volume came to 2 billion shares.

The Russell 2000 Index of smaller companies was up 6.48, or 1.12 percent, at 585.86.

Overseas, Japan’s Nikkei stock average fell 0.06 percent. In Europe, Germany’s DAX index gained 0.94 percent and France’s CAC-40 rose 0.69 percent. Markets in London were closed for a bank holiday.

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